Fact Pattern:Donnelly Corporation manufactures

1. Look at any CAFR of interest and discuss the revenues
May 5, 2020
Today’s college tuition rates have gone up much faster than the rate
May 5, 2020

Fact Pattern:<br/><br/><br/>Donnelly Corporation manufactures and

sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for $7.50 each, and the variable cost to manufacture them was $2.25 per unit. The company needed to sell 20,000 shirts to break even. The net income last year was $5,040. Donnelly’s expectations for the coming year include the following:

-The sales price of the T-shirts will be $9.
-Variable cost to manufacture will increase by one-third.
-Fixed costs will increase by 10%.
-The income tax rate of 40% will be unchanged.The selling price that would maintain the same contribution margin rate as last year is

– A.
– $10.00
– B.
– $9.00
– C.
– $8.25
– D.
– $9.75

 
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